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Under construction, under pressure

Under construction, under pressure

If you have been following this space (and if not, why not?), you will remember that earlier in the year we discussed the Elphicke-House review that called for local authorities to become ‘housing delivery enablers’.We debated (in fascinating and erudite terms, I’m sure you will agree) what this would mean and how local authorities could meet the challenge.Becoming Housing Delivery Enablers is a major leap for local authorities and, despite the examples of success highlighted in the review, there are numerous obstacles set in the way.Are local authorities ready?So what needs to be done? Mears and the Local Government Information Unit (LGiU) decided to find out in ‘Under Construction: Are councils ready to get the nation building?’.We conducted an in-depth survey of heads of housing, heads of regeneration and chief executives from English local authorities to ascertain their house building aspirations, the challenges they face and how they intended to tackle them.We also interviewed heads of housing from several local authorities and held a high level workshop in Cambridge that brought together representatives from across the region.So, what did we learn?First off, we learned that there was the political will to build more homes. Some 90% said their authority had a plan for the number of houses that they intended to build and 80% had a target for the number of affordable houses. However, only 60% felt that they were deliverable in the specified time frame.There was also general consensus that councils should be proactive and engaged in the housing market. However, we found that the majority has a relatively traditional view of local government’s role:

  • Less than 50% had set up a Joint Venture with Housing Associations, while just under a third said they had a Joint Venture with a private developer.
  • Less than 25% had used Special Purpose Vehicles, where the council commits a specific portion of land and a partner provides funding
  • Just over 10% had a Wholly Owned Company, or subsidiary, which they used to finance house building. Just 4% had used a Local Housing Company and 2% used a Local Asset Backed Vehicle.

Furthermore, only 4% said that they sought finance from pension fund investment, indicating difficulties that have been raised by others, around making a robust and appealing business case for their programme.They need skills to buildWhen asked, “What would help your council to build more homes?” almost two thirds said investment in skills and capacity.Market knowledge and risk assessment was seen as particularly important where wider, long-term goals are concerned. According to a housing strategy officer from the South West: “We need market intelligence to know where the gaps in the market are. This is a particularly big challenge outside of the affordable end of the market where we have less data.”It was argued that gaps in skills and experience put councils at a disadvantage as they often operate in unknown territory, which spreads a lack of confidence.Respondents also said that priorities needed to be aligned. The power to implement housing strategies can often sit in planning, or across different departments, making it particularly challenging to get coordination and action, and therefore lack strategic drive.Scale is also vital and regional partnerships are seen as central in delivering this. Often scale is necessary not only to make a building project economically viable and attractive to partners, but also to actually meet the needs of communities. Partnerships are key in order to deliver the scale, land and pooled resources.Councils also need a bolder, clearer vision of what they can offer, such as opening up land for development, providing a long-term view and finding innovative solutions.The most significant barrier to achieving targets is seen to be lack of funding. However, only a quarter felt that the cap on borrowing was a significant barrier, which indicates a general perception that councils should seek out alternative sources of funding.So where do we go from here?All in all, our research suggests that housing teams in local authorities are in a state of flux. Many recognise the need for new and creative approaches to building more homes, but most are not yet playing the role of ‘housing delivery enablers’.Local authorities see themselves as direct deliverers of new houses, rather than as facilitators creating the conditions for building in their area. While the former role is undoubtedly important, it must go much wider.Our report makes a number of recommendations for both local and central government:

  • Promote leadership and innovation to turn political will into reality
  • Address their skills gaps
  • Consider housing deals and combined housing authorities
  • Rethink departmental structures
  • Continuation of the New
Homes Bonus
  • Make incentives for house building central to future devolution arrangements
  • Ensure that incentives for house building are central to the implementation of the Right to Buy extension

In conclusion, the report says: “Over the last few years, local government has shown how innovative and proactive it can be. Despite serious challenges there is a growing consensus around a positive understanding of what councils can do. But they need to step up to the plate to make the most of the opportunities available. Action may entail risk, but the opportunity cost of inaction could be far greater.”For the full report go to: www.lgiu.org.uk/report/under-construction/